Gold rose to a six-week high in London as investors bought the metal as a haven following terrorist attacks in India and tension over Iran's nuclear research program.

At least 173 people were killed in Mumbai yesterday by eight explosions on trains and commuter stations. Iranian President Mahmoud Ahmadinejad said yesterday the country won't back down in its dispute with the United Nations over its nuclear program. Gold climbed 2.2 percent last week as North Korea fired at least seven rockets into the Sea of Japan.

``Gold gained on the Indian bombings, and there are problems in North Korea and the Middle East,'' said Bernard Sin, chief trader at Geneva-based MKS Finance, one of Switzerland's four gold refiners. ``The market will continue to scale up; tensions are still there.''

Gold for immediate delivery traded $5.09, or 0.8 percent, higher at $646.54 an ounce at 11:48 a.m. in London. Earlier it rose to $646.88, the highest since May 31.

Bullion for August delivery rose $5.10, or 0.8 percent, to $648.20 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

``You look at previous incidents and see the spikes on prices; still, incidents can't keep on happening'' said Matthew Turner, an analyst at Virtual Metals Consulting in London. ``Gold won't go up much more when this incident has worked its way through.''

Bullion surged 5.3 percent on Sept. 11, 2001, when terrorists attacked the U.S and fell 2.8 percent the following day.

Investment Funds

``Mumbai is the financial center of India. There was a big reaction to the incident and gold was bought up to match the concern,'' said Mikikaru Amano, an analyst at Taiheiyo Bussan Co. in Tokyo. ``With the unexpected incident, the base price should be around $620. I don't see gold going any higher than $650 for a while.''

The metal traded at a 26-year intra-day high of $730.40 on May 12 as investment funds poured money into commodities. Bullion has since lost 9.7 percent.

``It doesn't seem to be same sort of speculative flows we saw earlier this year, which is a good thing,'' said Virtual Metals' Turner. ``Still, that makes it more difficult for gold to gain and to move up in a straight line like before.''

Silver for immediate delivery rose 14 cents to $11.67.

The Indian attack was the worst in Mumbai in 13 years. The Lashkar-e-Taiba terrorist group, which seeks an end to Indian control of Jammu and Kashmir state, claimed responsibility, according to the CNN-IBN television channel.

North Korean Missiles

Iran's response to a five-week-old package of incentives to end the Islamic republic's uranium enrichment was ``not satisfactory,'' Agence France-Presse reported, citing European Union officials. The five permanent members of the UN Security Council and Germany will meet today to decide how to proceed, said Javier Solana, the European Union's foreign policy chief.

Some investors buy bullion as a store of value in times of geopolitical tension.

The Group of Eight industrialized nations are meeting July 15 in St. Petersburg, where Iran is expected to be a top agenda item. The U.S. State Department said June 1 that it would like a final answer from Iran over its nuclear research program before then.

The European Union has offered trade incentives and technology assistance in exchange for Iran to end uranium enrichment.

``Strong base metals, slightly higher oil prices and perhaps some safe haven buying after news of the bombing in India all have been attributed as reasons for the move,'' said John Reade, a London-based UBS AG analyst.

Gold is likely to continuing follow base metals higher as investors buy into commodities, Sin added.